As vice president of manufacturing at NutraMax Products Inc., Pete Patras always faced inventory questions when the company’s Gloucester, Mass., plant started a new batch of chewy vitamins. Patras knew that the plant had some amount of inventory, but he wasn’t sure if it was enough. And when the batch was completed—if he didn’t have to stop due to an inventory outage—he wasn’t sure how much inventory was left over for the next batch. He also didn’t know if he had enough packaging materials at the end of the line. Lastly, he had no idea what the inventory in the batch actually cost. All in all, the set-up was pretty normal for an unconnected plant.
Once plant data was integrated into the enterprise resource planning (ERP) system using software provided by Wonderware, an Invensys company based in Lake Forest, Calif., Patras had exact measurements of his materials. “We use plant floor data to tell what inventory we’re using,” says Patras. “Having accurate inventory data allows us to stock less without the risk of running out. There’s nothing worse than running out.” Now Patras maintains lower levels of inventory with no risk of shortages.
Inventory tracking was the company’s first phase of integration. The next phase attached cost to the inventory and calculated the cost of work-in-process. “We calculate cost per batch. In the past, we had to average batches to get the cost,” says Patras. “Now we get an accurate cost because we have an accurate view of the inventory.”
For the past couple of years, companies have been sending real-time plant production data to their ERP systems while also grabbing the latest schedules and checking actual inventory levels. The goal is to be able to make the right product at the right time, while keeping the smallest levels of inventory. And since everything is connected, an added goal is making sure the scheduled downtime for maintenance happens during a planned break in production.
Every plant wants to operate this efficiently, but until the plant was integrated with the business system, manufacturers were flying blind. When they couldn’t see across systems, they had to maintain extra-high inventory levels to avoid outages, and they were never sure if the product being produced was the right product at the right time. And maintenance was usually an intrusive monkey wrench.
Plant-to-ERP integration has gained added visibility with the emergence of the ISA-95 standard promulgated by the Instrumentation, Systems and Automation Society, which provides a standardized method for making the links. An added driver is the need throughout industry to squeeze production expenses. “Margins are so thin, and competition is so keen, manufacturers have to drive costs out of production,” says Dick Slansky, senior analyst for direct discrete manufacturing at analyst firm ARC Advisory Group Inc., in Dedham, Mass. “They have no control over the cost of materials, but they can optimize and control the cost of producing the product.”
Integration can certainly drive costs down, and it can also make a company more agile and able to respond to market conditions. “Sonoco made its profit in the old days by switching from producing gasoline to producing heating oil quicker than anyone else,” says Richard Martin, vice president of industry consulting at Aspen Technology Inc., an automation software vendor based in Cambridge, Mass.
Connecting plant data to the ERP was the last stretch and the most difficult in terms of getting organizations fully connected. The other parts of the organization—such as supply chain and customer relations systems—have been connected for years. Those systems were designed to connect to the ERP. The plant data system was designed to run a plant—connectivity to other systems was an afterthought.
For Randy Lewis, director of information services at Equistar Chemical Co., the biggest problem with integration was translating the plant data. The Plantelligence automation system, provided by Aspen Technology Inc., of Cambridge, Mass., tracks 15,000 data items every 15 seconds at Equistar’s Bay City, Texas, plant.
The operation produces 1.6 billion pounds of polyethylene annually. Try reconciling that data to an ERP system that’s busy producing quarterly financial reports.
Lewis found the integration to be particularly difficult because of the need to match apples and oranges in the way plant systems and enterprise systems view data. “Business and manufacturing processes are very different because they deal with two very different types of data—transactional versus real-time,” says Lewis. “They have two different types of domains. Business looks at months, weeks and days, while the plant looks at seconds and sub-seconds.”
But the benefits were worth the struggle. Reconciliation of material balances used to take three days each month. Now it takes only a few hours. Production bottlenecks have become easy to identify, and rerouting can be done instantly. The integration saved Equistar five times the investment over the first two years.
Suddenly, a path
Without ISA-95, the difficulties of integrating the plant floor with the ERP system might overwhelm the benefits. When ERP leader SAP AG, of Walldorf, Germany, adopted the ISA-95 standard in 2004, real-time plant information suddenly had a reliable path to the ERP. “One of the most important developments is ISA-95. That standard is accelerating the integration between business and plants,” says Martin, of Aspen Technology. “ISA-95 is a common language that carves the space in a way that everyone can understand.”
ISA-95 allows plant and business teams to spend more time deciding how to make data useful rather than concentrating on exchanging the data. “The ISA-95 standard gives us a way to get information back and forth between the enterprise and manufacturing systems,” says Marc Leroux, manager of collaborative manufacturing at automation systems vendor ABB Inc., in Norwalk, Conn. “It takes the integration difficulty off the table and allows us to focus on creating a loop of production information from manufacturing to the enterprise system and back.”
A fully integrated system means there is no possibility for error. “By going to the ISA-95 standard, we can focus on production control and the ability to provide accurate information about the plant,” says Matt Tormollen, chief marketing officer at Pavilion Technologies Inc., an Austin, Texas-based provider of advanced process control systems. “We take data directly from programmable controllers or historians and integrate it into the business system, so the business decisions will be based on accurate production information.”
The first reason to connect plant data with the ERP was to get scheduling and production right. The plant managers want the latest and most accurate schedules, while the business folks want to know what’s being produced. And both groups want to know if there’s enough inventory to get it done. “In order to lower inventory—and that’s a benefit people want—you need confidence that your plant can reliably produce what they can produce,” says Francois Leclerc, senior product manager for advanced process control at Honeywell Automation and Control Systems, in Minneapolis.
Maintenance also improves with integration. Most plants didn’t tie the plant data to business data in order to get maintenance coordinated effectively, but it’s a handy side benefit. “There used to be a huge amount of inertia with maintenance,” says Martin, of Aspen Technology. “With integration, it’s like a war room for the army. Everybody in the plant knows what’s going on with maintenance.”
This viability allows the plant to match scheduled maintenance work with scheduled downtime. But more than that, it provides the visibility that helps identify maintenance problems before they occur.
The last mile of connectivity from plant to ERP was traveled for the purpose of meeting lean manufacturing principles. But integration also gives companies a major tool needed for continual quality improvement. If lack of information is the rust that stymies efficient operations, then integration is the plentiful source of lubricant that can keep the plant and business operations well oiled. With integration, plant managers get to make the right product at the right time, and business people get to optimize the plant to squeeze down costs while pushing up profits.
The key is putting accurate data in the hands of those running the company so they can improve overall operations. “The manufacturing model is changing from a top-down approach to bottom-up,” says ARC’s Slansky. “The top-down approach—with schedules coming from the ERP system—didn’t get accurate information down to the plant level.” Slansky says that process integration now allows plant data to move up to the ERP system, creating a bottom-up, event-driven data flow. “Now the folks in operations get a real-time snapshot of real events as they occur. From there, you can create lean manufacturing.”
For more information, search keyword “ISA-95” at www.automationworld.com.